In a July review of the High-Speed Rail Authority’s 2026 business plan, Inspector General Ben Belnap reported that the project will run out of cash by December 2027 unless it borrows against future cap-and-invest revenue. When borrowing costs and other unbudgeted expenses are included, the IG estimates that CHSRA will have to spend as much as $45 billion all-told to begin service between Merced and Bakersfield, far more than the $39 billion in identified funding. So, it appears that the bullet train project is once again facing an existential crisis that will challenge our next Governor.
Frontrunner Xavier Becerra said in May that he would scrap the current configuration and finish the system on time and on budget. He has not said where the money would come from, nor did he offer any specifics about what his new configuration might look like.
Today, high-speed rail is subsisting on a diet of annual $1 billion state cap-and-invest revenue infusions. But cap-and-invest revenue is expected to decline over the next decade, and other potential recipients will be battling CHSRA for their share. While Authority CEO Ian Choudri talks up the prospects for private investment, I previously explained on these pages why investors will be cautious without a state guarantee.
New federal support might bridge the gap but getting it will be a very steep climb. After the Federal Railroad Administration canceled about $4 billion in grants in 2025, citing delays, rising costs and missed milestones, the state sued and then dismissed its own suit on December 23, calling Washington an unreliable partner. It filed that dismissal without prejudice, which keeps open the option to sue again.
Becerra sued the first Trump administration 120 times as attorney general. On August 11, he said, “We’re going to fight to get our money from the federal government, first and foremost.” His likely approach is to restart litigation after he takes office in 2027 and count on a Democratic Washington in 2029 to make a larger federal commitment.
A refiled suit would face long odds. Courts give agencies wide latitude to cancel grants for cause, and the federal record works against California. Julie Watts at CBS News reported that the state never bought the trains it promised and missed the deadlines tied to the grants, giving the government a straightforward defense. Further, dropping a previous case does not strengthen a later one, and litigation will take many years to conclude. Finally, a favorable ruling would restore only about $4 billion, less than the funding gap identified in the IG report.
The hope for 2029 is also faint. Suppose Democrats win the White House and Congress in 2028 and take office the following January. A rescue would still compete against trillion-dollar deficits, rising federal interest costs, and priorities that poll far ahead of a California rail project, from Social Security to Medicaid and Medicare (possibly Medicare for All).
Given elevated interest rates and a higher dependency ratio fueled by Baby Boomer retirements, the federal government will lack the fiscal space Joe Biden had in 2021, let alone what Barack Obama faced in 2009. Sending another $10 billion or more to one state’s train project would require sixty Senate votes or a reconciliation bill, and members from other states will want their own projects funded first. Even normally sympathetic Democrats may be reluctant to double down on California’s troubled project.
Hopefully, voters will join Becerra’s gubernatorial opponent, Steve Hilton, in holding the frontrunner accountable on high-speed rail. But I fear that once he is in office, Becerra will find ways to kick the can down the road, dripping a billion dollars each year into a project that has little, if any, chance of providing tangible transportation benefits in the foreseeable future.
Marc Joffe is a visiting fellow at the California Policy Center